Coalition formation as a dynamic process

Hideo Konishi; Debraj Ray

doi:10.1016/S0022-0531(03)00004-8

Coalition formation as a dynamic process

Hideo Konishi, Debraj Ray

Research output: Contribution to journal › Article › peer-review

Abstract

We study coalition formation as an ongoing, dynamic process, with payoffs generated as coalitions form, disintegrate, or regroup. A process of coalition formation (PCF) is an equilibrium if a coalitional move to some other state can be "justified" by the expectation of higher future value, compared to inaction. This future value, in turn, is endogenous: it depends on coalitional movements at each node. We study existence of equilibrium PCFs. We connect deterministic equilibrium PCFs with unique absorbing state to the core, and equilibrium PCFs with multiple absorbing states to the largest consistent set. In addition, we study cyclical as well as stochastic equilibrium PCFs.

Original language	English (US)
Pages (from-to)	1-41
Number of pages	41
Journal	Journal of Economic Theory
Volume	110
Issue number	1
DOIs	https://doi.org/10.1016/S0022-0531(03)00004-8
State	Published - May 1 2003

Keywords

Coalition formation
Dynamic equilibrium
Farsightedness

ASJC Scopus subject areas

Economics and Econometrics

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10.1016/S0022-0531(03)00004-8

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title = "Coalition formation as a dynamic process",

abstract = "We study coalition formation as an ongoing, dynamic process, with payoffs generated as coalitions form, disintegrate, or regroup. A process of coalition formation (PCF) is an equilibrium if a coalitional move to some other state can be {"}justified{"} by the expectation of higher future value, compared to inaction. This future value, in turn, is endogenous: it depends on coalitional movements at each node. We study existence of equilibrium PCFs. We connect deterministic equilibrium PCFs with unique absorbing state to the core, and equilibrium PCFs with multiple absorbing states to the largest consistent set. In addition, we study cyclical as well as stochastic equilibrium PCFs.",

keywords = "Coalition formation, Dynamic equilibrium, Farsightedness",

author = "Hideo Konishi and Debraj Ray",

note = "Funding Information: Initial research on this project was conducted when Konishi was a visiting scholar at Boston University, and Ray was a faculty member at Boston University. Konishi thanks KIER at Kyoto University for hospitality and financial support. Ray gratefully acknowledges a fellowship from the John Simon Guggenheim Foundation. We thank Michael Chwe, Bhaskar Dutta, Aki Matsui, Shigeo Muto, Yves Sprumont, Rajiv Vohra, Peyton Young and especially Hsueh-Ling Huynh for helpful comments at various stages of this research. We also thank an associate editor and an anonymous referee whose comments shaped the current version of this paper. This paper is dedicated to the memory of Bob Rosenthal. ",

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doi = "10.1016/S0022-0531(03)00004-8",

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AU - Konishi, Hideo

AU - Ray, Debraj

N1 - Funding Information: Initial research on this project was conducted when Konishi was a visiting scholar at Boston University, and Ray was a faculty member at Boston University. Konishi thanks KIER at Kyoto University for hospitality and financial support. Ray gratefully acknowledges a fellowship from the John Simon Guggenheim Foundation. We thank Michael Chwe, Bhaskar Dutta, Aki Matsui, Shigeo Muto, Yves Sprumont, Rajiv Vohra, Peyton Young and especially Hsueh-Ling Huynh for helpful comments at various stages of this research. We also thank an associate editor and an anonymous referee whose comments shaped the current version of this paper. This paper is dedicated to the memory of Bob Rosenthal.

PY - 2003/5/1

Y1 - 2003/5/1

N2 - We study coalition formation as an ongoing, dynamic process, with payoffs generated as coalitions form, disintegrate, or regroup. A process of coalition formation (PCF) is an equilibrium if a coalitional move to some other state can be "justified" by the expectation of higher future value, compared to inaction. This future value, in turn, is endogenous: it depends on coalitional movements at each node. We study existence of equilibrium PCFs. We connect deterministic equilibrium PCFs with unique absorbing state to the core, and equilibrium PCFs with multiple absorbing states to the largest consistent set. In addition, we study cyclical as well as stochastic equilibrium PCFs.

AB - We study coalition formation as an ongoing, dynamic process, with payoffs generated as coalitions form, disintegrate, or regroup. A process of coalition formation (PCF) is an equilibrium if a coalitional move to some other state can be "justified" by the expectation of higher future value, compared to inaction. This future value, in turn, is endogenous: it depends on coalitional movements at each node. We study existence of equilibrium PCFs. We connect deterministic equilibrium PCFs with unique absorbing state to the core, and equilibrium PCFs with multiple absorbing states to the largest consistent set. In addition, we study cyclical as well as stochastic equilibrium PCFs.

KW - Coalition formation

KW - Dynamic equilibrium

KW - Farsightedness

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Coalition formation as a dynamic process

Abstract

Keywords

ASJC Scopus subject areas

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